Jeanne, you are one of a few who does their homework and has a solid understanding of financial and economic markets and how they relate to real estate. Good point to raise.
The 5% price decline is only predicted by RealtyTrac. Meanwhile Professor Shiller of Case-Shiller, and Mark Zandi, who is one of the most respected economists in the industry, states it could be as much as another 20% price drop nationally. Now, those who scoff at national numbers simply do not have a good grasp of business cycles and how macro markets can and do indirectly affect micro markets- both positive and negative. In this case it will be negative. And the degree of negativity will vary from local market to local market, that much is true. I do not argue that markets vary from one local' to another.
But, with the continual shift in oversupply, prices will continue to drop. I'm not sure about some of the nay-sayers on here, but the correlation between supply and price is irrefutable. But maybe some missed that economics class. You have to look at the AD-AS model for a macroeconomic picture as well as the supply-demand model of microeconomics. Both play key roles in housing markets.
With a shortage of demand, prices cannot rise, period. This macro effect will eventually influence the economic forces on many micro markets. In the case of housing, the shift in demand is a direct result of the labor markets instability, both on local and national levels. Even as price curve moves to a lower point, absorption rates will not increase- because of the lack of purchasing power. Reduced or no jobs = little or no P-P.
This is not up for debate, these receivership numbers are credible. No one is creating 'bogus' numbers as suggested. 1 in 5 borrowers are delinquent to some extent. How many of those 1 in 5 do you actually think will recover and make up the arrears payments? And then stay current? How many do think will go into foreclosure? I'll be generous and give you a 95/5 ratio. But it's probably more like 99/1.
It amazes the rhetoric that is written by so-called local experts. These are the same so-called experts that said years ago, the housing bubble was over-blown by the media. The foreclosures debacle was over-blown by the media. The lack of information credibility in our industry is overwhelming, thanks in part to many who do not do any in-depth research, data mining and thoughtful analysis. Some do a good job, but many do not.
Funny how many of the local 'arm-wavers' have been mostly incorrect. I know, I know...you have been in real estate for (insert years: 15, 20, 25, 30...years and you have seen it all...and apparently, some seem to know it all. roll eyes) (But, apparently some really don't)
On the foreclosure front: In fact, the tide of foreclosures (shadow & undisclosed bank inventories) could be as high another 5 MILLION. Yes, 5 million. (Moody's Analytic's)
Real unemployment stands at 20.9% in the U.S. In NJ, it's hovering near 15%. Not the BS 9.1% the DoW&L reports. The conveniently leave out 1099/labor force drop-outs and part-timers) (as does the BLS)
It simply comes down to jobs and purchasing power. Yes, some market will see increased activity. Some will see a surge in sales. But the majority of regional and local markets will remain flat or decline.
Factors to consider will be, household wealth and savings, earning power, credit worthiness and the subsequent borrowing power. It's only a "good time to buy" for a certain segment of the public. An adequate DP, and the criteria mentioned above have to met. Convincing people to buy that do not have an acceptable DTI and stable employment is neither professional or honorable.
Yes, I believe that some of the more wealthier and affluent income brackets will probably buy in the coming year. I do think S/S's can help to plow through some of the built up inventory, but, banks have to cooperate. So far, they have not been playing nicely. Killing deals, delaying deals for seemingly, trivial reasons. I have dealt with Equator and Chase on a number of S/S's and REO's with extremely frustrating results.
But overall in NJ, the economic landscape is not improving. The pension system HAS to be reformed, hopefully Christie will keep his promise. We still have the highest tax burden in the nation. Property taxes have to dealt with. We have to lower them, not just cap them. It is out of control. As long as these major economic issues are not addressed and not reformed then most of NJ will not see healthy real estate markets for years to come. I simply do not get the argument that some have put forth.
Facts and figures (stemming from corruption and poor policies) have led us into this mess, thousands upon thousands of real people in NJ are out of work, thousands upon thousands have lost their homes. The only bogus thing is the denial of these facts and figures. But hey, some people believe what they choose to believe...damn the facts! ; )